Correlation Between Petroleo Brasileiro and Impact ISR

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Impact ISR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Petroleo Brasileiro and Impact ISR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Impact ISR Performance, you can compare the effects of market volatilities on Petroleo Brasileiro and Impact ISR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Petroleo Brasileiro with a short position of Impact ISR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Impact ISR.

Diversification Opportunities for Petroleo Brasileiro and Impact ISR

0.49

Correlation Coefficient

Petroleo Brasileiro  Impact ISR

Very weak diversification

The 3 months correlation between Petroleo and Impact is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Impact ISR Performance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impact ISR Performance and Petroleo Brasileiro is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Petroleo Brasileiro Petrobras are associated (or correlated) with Impact ISR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impact ISR Performance has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Impact ISR go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Impact ISR

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Impact ISR. In addition to that, Petroleo Brasileiro is 2.38 times more volatile than Impact ISR Performance. It trades about -0.03 of its total potential returns per unit of risk. Impact ISR Performance is currently generating about -0.02 per unit of volatility. If you would invest  5,498  in Impact ISR Performance on September 15, 2024 and sell it today you would lose (52.00) from holding Impact ISR Performance or give up 0.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Impact ISR Performance

Petroleo Brasileiro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petroleo Brasileiro Petrobras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Petroleo Brasileiro is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Impact ISR Performance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impact ISR Performance has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly stable basic indicators, Impact ISR is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Petroleo Brasileiro and Impact ISR

The main advantage of trading using opposite Petroleo Brasileiro and Impact ISR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Impact ISR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Impact ISR will offset losses from the drop in Impact ISR's long position.

The idea behind Petroleo Brasileiro Petrobras and Impact ISR Performance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.